What is venture philanthropy?
While European societies need new and innovative models to tackle societal issues, social enterprises and social purpose organisations (SPOs) lack stable funding, capacity and partnerships to take up their own, ever-increasing challenges.
This is where venture philanthropy and social investment come in.
Venture philanthropy (VP) and social investment (SI) address the growing need for support and flexible funding. Through three core practices, VP/SI offers an effective, high-engagement and long-term approach to supporting SPOs in generating social impact.
- Tailored financing
The process through which a venture philanthropy organisation or a social investor (VPO/SI) finds the most suitable financial instrument(s) to support a social purpose organisation (SPO), choosing from the range of financial instruments available (grant, debt, equity, and hybrid financial instruments). The choice of the financial instrument(s) will depend on the risk/return/impact profile of the VPO/SI and on the needs and characteristics of the SPO.
- Organisational support
Added value support services to strengthen the SPO’s organisational resilience and financial sustainability, by, for instance, developing skills or improving structures and processes.
- Impact measurement and management
Impact measurement helps pinpoint what works and what doesn’t, so you can manage your impact better. This is why we talk about impact ‘management’ rather than ‘measurement’ or ‘assessment’.
Key stakeholders in venture philanthropy
Why use venture philanthropy?
Venture philanthropy is one of the most effective tools in the social investment and philanthropy toolkit. It has emerged in Europe as a high-engagement approach to social investment and grantmaking across a wide range of SPOs. It can be applied in both charities and non-profit organisations and socially-driven businesses.
Social investment refers to funding that may generate a financial return, but where societal impact comes first – the so-called Impact First strategies. Grant funding on the other hand means non-repayable donations are made to the social purpose organisation supported – an Impact Only strategy.
Finance first strategies, where the financial return is maximised and the societal impact is secondary, are not included in EVPA’s definition of venture philanthropy.
